Streaming would always be a big part of Disney’s next phase, but now it’s clear that Disney Plus really is the company’s future.
Disney yesterday announced a “strategic restructuring” of its media and entertainment divisions, which position the company to meet more aggressively with its audience where it is – at home, streaming shows and movies to its TV. According to the new organization, Kareem Daniel, CEO who has managed consumer products, games and publishing, is moving from this unit to control all of Disney Plus. It may seem strange to put a non-streaming artist in charge of streaming, but the change seems to signal that Disney wants a less traditional approach to the entertainment and media business, with a focus on “delivering and monetizing our great content.”
The aim is to empower individual studio and network managers to decide where their programs should go, “as opposed to somehow predetermining that the film is intended for theaters or a television show for ABC,” the CEO said. of Disney’s Bob Chapek.
One of the biggest differences between Disney’s public strategy before and after this reorganization is the additional emphasis on creating exclusive streaming services, especially Disney Plus. The company noted in a press release that with the new reorganization structure, three content groups will be responsible for the production and delivery of content, “with the main focus on the company’s streaming services.” This potentially means that Disney can give studio and network executives even more power throughout the calendar year, allowing them to decide where they think certain projects should live, whether at Disney Plus, theaters or on television. .
Disney Studios chairman Alan Horn hinted at this approach back in February. During a round table with The Hollywood reporterHorn talks about how Studios can use Disney Plus as an area for movies they are proud of, but are unlikely to perform so well at the box office. Smaller movies like McFarland, USA ($ 45 million worldwide) or Queen of Katwe ($ 10.3 million worldwide) could potentially find a larger audience at Disney Plus, while movies with huge box office potential like Lion King,, Captain Marvel,, or a new part of Star Wars may receive theatrical editions. According to his press release, the creatives who control Disney’s largest franchises “will focus on developing and producing original content for the company’s streaming services.”
This reorganization has been going on for some time, Chapek told CNBC – the pandemic simply accelerated it. Streaming is now the only major source of revenue for the company, as parks remain closed and theatrical versions are pushed back. The shake-up is a public show of confidence in Disney’s new and fast-growing business – one that even Netflix co-CEO Reid Hastings hailed a few months ago.
In essence, Disney now has two revenue areas that it is focused on growing: Disney Parks (a division that also includes merchandise and other non-entertainment products) and the new Media & Entertainment Distribution division. Although it is not too difficult to imagine that the parks will recover in the years following COVID, it is the company’s media and entertainment sector, and in particular streaming, that represents Disney’s opportunity for immediate growth.
Disney’s future is in streaming The theatrical landscape is terrible, parks in the United States and other regions will remain closed for the foreseeable future, and cruises are unlikely to appear soon. On the other hand, streaming is growing faster than even Disney could have expected. Disney now has more than 100 million subscribers on its various streaming platforms, with more than 60 million of these subscribers coming from Disney Plus. Chapek called the figures “an important milestone and confirmation of our DTC (direct to consumer) strategy, which we consider key to our company’s future growth,” in the company’s latest quarterly call.
Disney’s biggest investors and analysts agree. Dan Loeb, an activist investor whose Third Point Capital is one of Disney’s largest shareholders, even asked Chapek to end Disney’s $ 3 billion annual dividend in an attempt to channel more capital into Disney Plus content. It’s an unusual move for an activist investor to ask a company not to pay the money they’re entitled to, according to CNBC, but Loeb noted that “by redistributing a dividend of a few dollars a share, Disney could more than double its Disney + original content budget. ”
“Disney has already proven that Disney + is a big enough lifeboat to help the company reach the other side of this media cataclysm in a strong position,” Michael Nathanson, a senior analyst at MoffettNathanson, wrote in a note this morning.
Netflix co-chair Ted Sarandos said this last week Diversity that while excited by new entrants like Disney Plus, he believes that “everyone’s level of engagement still needs to be defined”, adding that “there is still something called Disney Plus” that is separate from Disney generally. This may have been true in the months before the pandemic, but with the new public reorganization and comments from Chapek, it is clear that Disney in general is very, very Disney Plus.